Sharekhan's research report on Bajaj Auto
BAL is expected to benefit from growth in the premium bikes segment, which is recovering, aided by premiumization trend and new launches. Moreover, we expect BAL to gain market share in exports, driven by its brand equity and enhanced distribution network. Improvement in operating profit margin (OPM) witnessed in Q2 & Q3 of FY21 is likely to stay, driven by cost and operational efficiency. The stock is trading at P/E multiple of 17.9x and EV/EBITDA multiple of 12.2x its FY2023E estimates and is at below its long-term average multiples. We retain our Buy rating on the stock.
Outlook
We interacted with the management of Bajaj Auto Limited (BAL) to discuss its plans for electric two-wheelers (e-2Ws) and readiness to benefit from increasing e-2W penetration in the medium to long term. The company is well positioned both in terms of capacity and capability to roll out faster e-2Ws, if the adoption of electric vehicles succeeds at a faster rate.
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